Expected return of a portfolio using beta. The beta of four stocks—P, Q, R, and S—are 0.49, 0.81, 1.19, and 1.53, respectively and the beta of portfolio 1 is 1.01, the beta of portfolio 2 is...

Expected return of a portfolio using

beta.

The beta of four

stocks—P,

Q, R, and

S—are

0.49,

0.81,

1.19,

and

1.53,

respectively and the beta of portfolio 1 is

1.01,

the beta of portfolio 2 is

0.86,

and the beta of portfolio 3 is

1.15.

What are the expected returns of each of the four individual assets and the three portfolios if the current SML is plotted with an intercept of

4.5%

(risk-free rate) and a market premium of

12.0%

(slope of the line)?

What is the expected return of stock P?